What will happen to my intraday (MIS/CO) position in case the stock circuit limits are hit?
Margin Intraday Square Off (MIS) and Cover Orders (CO) are types of intraday orders that are auto squared off before market close, if not done by the trader.
Both the order types are facilities wherein you get to take higher intraday trading position/s using cash and holdings (stock) as margin. All such positions need to be compulsory closed before the close of market hours on the day itself.
While trading MIS or CO you carry the risk of losing the money due to leverage as well as the additional risk of not being able to square off your positions, because of the stocks hitting the upper or lower circuit. There’s also a possibility of ending up with a huge overnight and auction risk on positions taken with leverage.
When a stock hits Upper Circuit
There are only buyers (BID) and no sellers (ASK) in the market. Hence if you have an open Sell MIS / CO position, and the stock hits the upper circuit at the time of square-off, the buy order will not get executed since there are no sellers in the market. In such a situation, your intraday sell order will get converted into delivery.
If the stock is available in your demat account, it will get delivered to the Exchange, and you will receive the trade value on T+2.
If you do not have the stock in your demat account, an auction will be conducted on T+3 to find sellers for this stock to be delivered to the buyer.
When a stock hits Lower Circuit
There are only sellers (ASK) and no buyers (BID) in the market. Hence if you have an open Buy MIS / CO position, and the stock hits the lower circuit at the time of square-off, the sell order will not get executed since there are no buyers in the market. In such a situation, your intraday buy order will get converted into delivery.
You will need to fund the entire trade value by T+2, otherwise we will start charging you interest on the amount short-funded from T+3 till T+7. If the amount is not completely funded till T+7, the position will be squared off.
To know the latest price circuit limits set by the Exchange, click here and search for the report titled “CM – Price Band complete list”. The name of the file would be sec_list_ddmmyyyy.csv.